Canadians Need A Better Public Pension Plan Not Empty Promises

The Trudeau government's first budget offered hope but little change on increasing the CPP in our lifetime. After extolling the virtues of the Canada Pension Plan, we're told that the finance ministers talked about enhancing the CPP last December and set a goal of making a collective decision before the end of 2016. And, oh yes, the government will launch consultations.

But the promise of yet more consultations is deeply disappointing. If we needed any more proof that Canadians are talked out about CPP, check out the revelations about the last such consultation. After years of refusing to let the word "CPP" pass their lips without a sneer, the Harper government sought reaction to its surprise proposal to offer a voluntary CPP. A grand total of 47 responses were submitted. Twenty-six for to 17 against, in case you were wondering. Hardly worth the effort!

The next round of CPP talks comes in June when the federal and provincial finance ministers meet again.

It's hard to guess what he's optimistic about. The CPP amending formula amounts to a virtual veto. The reverse is also true -- the previous federal government exercised its veto when the provinces almost reached a consensus.

We need two-thirds of the provinces agreeing to increase CPP -- at the same time! And we don't have it. Not now, maybe never.

Hearts were set aflutter when the new federal government promised to work with the provinces to enhance the CPP. In the Throne speech and in the mandate letter to the finance minister, the CPP was highlighted. It topped the agenda for the first finance ministers' meeting. Then we broke for Christmas.

The provincial consensus started to fray early.

Ontario announced in February that its new pension plan, the ORPP -- the only actual pension reform offered in a generation -- would be deferred one year to 2018. The feds needed more time to herd the other provinces into the fold.

A faint hope. Saskatchewan's finance minister was given the starring role last December saying there was no deal on CPP and wouldn't ever be if it were up to him. With just over three per cent of the population, Saskatchewan's vote was unlikely to ever matter but with his new mandate, Premier Brad Wall might rally opposition voices among the provinces.

Manitoba's NDP government was ready to join the Ontario initiative. With the change in government, Manitoba is likely to line up with its federal Conservative counterpart and soulmate Saskatchewan's "No, not ever."

Alberta's NDP government should be ideologically aligned with its federal counterpart on increasing the CPP, but in December Premier Rachel Notley had other problems on her mind. Now with the Fort McMurray disaster on her hands, she can be forgiven for giving the CPP file a pass.

British Columbia with 13 per cent of the population comes up for a vote in 2017. Given the flack Premier Christy Clark has taken on political fundraising, what are chances that she will spend any political capital on a CPP increase?

And Quebec. It's always something with Quebec. Premiers Couillard and Wynne may act like BFFs on cap and trade, but on this, désolé! In December, premier Couillard agreed with the principle of a supplementary plan like Ontario's, but the threshold had to be higher or "Not never, but not right now!" With 23 per cent of the population, Quebec holds a virtual veto.

The Atlantic provinces have six per cent of the population, but after their austerity budgets, they couldn't convince people to live with an even smaller paycheque to save for retirement. Their electorate just wants to make next month's rent!

So there you have it folks! We need two-thirds of the provinces agreeing to increase CPP -- at the same time! And we don't have it. Not now, maybe never.

So why is a CPP increase needed again? Canadians are not saving enough for retirement and government can help. Those braying "Too bad for them!" need to realize that every pension dollar reduces the need for taxpayer-funded payments like Old Age Security, Guaranteed Income Supplements or even welfare.

Older Canadians know the fear of outliving their money, but it's younger Canadians who have to clue in and start saving. And their options are limited. CPP as it is will not be sufficient. Two thirds have no workplace pension plan to help them save. Middle-income Canadians don't use their RRSPs like their higher-income counterparts and therefore risk a much lowered standard of living when the paycheques stop.

Behaviourial finance -- the science of why people who skipped math behave irrationally when faced with a financial decision -- explains why people don't act in their own best interests when it comes to saving (and investing) for their own retirement. So they don't save unless forced to -- good thing the CPP just takes the premiums off their paycheques. And most know they'd be better off if they let the real experts invest their money for them. The rest figure that out when they lose their shirt in the stock market.

So when the polls show that more Canadians support a CPP increase, it's not the CPP they love -- it's just the only one on offer. What they want and need is a large public pension plan they can all join. Call it what you like, just let us in!

The feds should therefore issue a challenge to the provinces: put up or shut up about caring that Canadians need help to save for their own retirement.

And they can offer to let any province setting up a CPP-like pension use the federal services that deduct CPP contributions from our paycheques and send out the CPP pension cheques. This was offered to Ontario to defer its ORPP.

This way, the Trudeau Liberals get to fulfill the true spirit of their election promise -- giving Canadians, especially the middle class, real hope that they can have a decent retirement.

Apple is the world's largest electronics company, and at current market prices, is giving ExxonMobil a run for its money as the world's most valuable company.
Source: Canada Pension Plan Investment Board, March, 2011 figures (latest available)

ExxonMobil is the world's largest oil company and is either the first or second largest company in the world, depending on stock prices.
Source: Canada Pension Plan Investment Board, March, 2011 figures (latest available)

Potash Corp. is based in Saskatoon and is one of the world's leading producers of ingredients for fertilizer.
Source: Canada Pension Plan Investment Board, March, 2011 figures (latest available)

Anglo-Australian BHP Billiton is the world's largest mining company, and is the third-largest company in the world by recent market valuations.
Source: Canada Pension Plan Investment Board, March, 2011 figures (latest available)

Though it's known these days for its electronics, Samsung is a large Japanese conglomerate that does everything from providing life insurance to running theme parks.
Source: Canada Pension Plan Investment Board, March, 2011 figures (latest available)

The Dutch-English company Royal Dutch Shell is one of the world's largest oil producers.
Source: Canada Pension Plan Investment Board, March, 2011 figures (latest available)